Australia growth fell to 0.11% in Nov., down from 0.51% in Oct.
Australia growth fell to 0.11% in Nov., down from 0.51% in Oct.

Aussie Growth Rate Losing Momentum

Aussie Growth Rate Losing Momentum

While the Australian economy recorded its largest contraction since the global financial crisis last quarter, that’s unlikely to be repeated in the months ahead if the latest Westpac-MI leading index is anything to go by. However, it’s not exactly signaling there’s boom times ahead either.
The survey’s six month annualized growth rate, an indication on the likely pace of economic activity relative to Australia’s trend growth rate looking three to nine months into the future, fell to 0.11% in November, down from 0.51% in October, Business Insider reported.
Although a decrease, the positive figure indicates that economic growth is likely to be above trend—now seen at around 2.75% per annum—in the first half of next year. So, based on what the index is suggesting, growth will be OK without being spectacular.
“The run of four consecutive above trend readings is signaling a better outlook for the first half of 2017,” said Bill Evans, chief economist at Westpac. “Nevertheless, it is disappointing that the growth rate appears to, once again, be losing momentum.”
In the 15 months to August this year, the index had previously printed in negative territory, a lead indicator, funnily enough, for the ugly September quarter GDP report that was released at the beginning of this month.
Evans notes that the improvement in the indices growth rate in the past six months was almost entirely driven by an improvement in the survey’s international components.
 “Rising commodity prices (0.49 percentage points), the steepening of the yield curve (0.41 percentage points) and the lift in the share market (0.07 percentage points) have played the dominant roles,” he said. Offsetting those improvements, he says that its domestic components have actually been weakening.
“Dwelling approvals (minus 0.57 percentage points), the Westpac-MI consumer sentiment expectations index (minus 0.13 percentage points) and Westpac-MI unemployment expectation index (minus 0.10 percentage points) have all subtracted from growth,” he said.
With the index now pointing to the likelihood of slightly above trend growth in the first half of next year, Evans says he remains comfortable with his forecast for 3% GDP growth in 2017.
However, that confidence doesn’t extend to the latest treasury forecasts offered in its mid-year economic and fiscal outlook earlier this week.
“We struggle somewhat with the government’s MYEFO forecast for 2016/17 which implies average quarterly growth of around 0.8% per quarter in the December (2016), March (2017) and June (2017) quarters,” says Evans.

Short URL : https://goo.gl/xjJV0g
  1. https://goo.gl/HJrfeL
  • https://goo.gl/tImh26
  • https://goo.gl/HZtL71
  • https://goo.gl/4prxPK
  • https://goo.gl/EXgxPM

You can also read ...

Business confidence fell to its lowest level since August 2013 and around 7% of companies expected a contraction.
According to data from the International Monetary Fund in...
China Warned of Ballooning SOEs
Former chief of the World Bank Robert Zoellick cautioned China...
Shrinking unemployment in the US, Japan and the eurozone finally forces companies  to lift wages to retain and attract staff.
Workers in the world's richest countries are getting their...
New Zealand Q2 GDP Growth Picking Up
New Zealand’s economic growth is expected to have accelerated...
Saudi Sovereign Fund Secures $11 Billion Loan
Saudi Arabia's sovereign wealth fund said Monday it had...
Lira Eases Against Dollar
Turkey’s lira weakened against the dollar on Monday as...
By 2025 more than half of all current workplace tasks  will be performed by machines.
Robots will handle 52% of current work tasks by 2025, almost...
Myanmar Businesses Want Lower Taxes
Myanmar businesses are urging the government to lower the...

Add new comment

Read our comment policy before posting your viewpoints